The government has provided justification for the imposition of a 15% Value Added Tax (VAT) on electricity consumption, aiming to generate additional revenue for the COVID-19 recovery program.
In a letter dated January 1, Finance Minister Ken Ofori-Atta directed the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to apply the VAT to residential customers exceeding the maximum consumption level for lifeline units.
Deputy Energy Minister Andrew Agyapa Mercer acknowledged the difficulty of the decision but emphasized its necessity to settle debts owed to independent power producers, stating, “As we speak, as of July 2023, the amount of money that we owe to the IPPs alone is in the region of GH¢1.7 billion.”
Critics, including Joe Jackson from Dalex Finance and Kofi Kapito, CEO of the Consumer Protection Agency, have condemned the government's decision, describing it as harsh and ridiculous, respectively.
